Chancellor George Osborne said today he would explore plans to take out loans that will never be repaid, despite fears they will be shunned by investors.
The proposed scheme is an attempt to "lock in" cheap borrowing costs, which he said have fallen to record lows at times in recent months, reflecting investors' confidence in the coalition's deficit reduction plans.
Mr Osborne pressed ahead with the plans, which were mooted before the Budget, even though the National Association of Pension Funds said there would be little demand.
The scheme would also mean children not yet born will pay interest on debts racked up during the financial crisis of 2008/09.
The UK currently borrows money for a maximum of 50 years but the Government is to consult on whether there is demand for bonds with longer maturity dates, including 'perpetual bonds'.
The Chancellor said the UK's lower borrowing costs meant the Government had saved £36bn in interest payments compared to the previous Labour administration.
He said: "There have been times when the Treasury was borrowing money more easily than at any time - and few countries can say that at the moment."
But there are doubts as to whether the bonds would offer returns attractive enough to tempt investors, especially as two agencies recently warned the UK could lose its cherished AAA credit rating.
And there has also been criticism that the scheme is merely a "publicity stunt" to show off that the UK is currently being seen as a safe haven amid the eurozone debt crisis.
If launched, the scheme would mark the first time the Government has offered perpetual bonds for 60 years.
